Malaysia Daily, Maybank KE (2015-01-08)

Daily 08 January 2015 SECTOR UPDATE Malaysia Oil & Gas: Maintain Overweight Jekyll and Hyde An interesting 2015 to look forward to following oil price panic and O&G stocks major underperformance in 2014; majority of negatives priced in, values emerging. Expects a tale of two halves � a cautious 1H, interest returning in 2H as sensibility and value investing sets in. Positioning for key picks ahead of recovery. Yinson, BArmada, Dialog and Perdana are key BUYs. Tactical sector Overweight. Click here for full report » ECONOMICS External Trade, Nov 2014 No Trade Deficit in Sight Trade surplus surged to +MYR 11.1b in Nov 2014 (Oct 2014: +MYR1.2b). Despite falling crude oil price, crude oil trade surplus widened, natural gas trade surplus was sustained, while petroleum products trade deficit narrowed. Our 2015 trade surplus forecast is currently +MYR78.3b (2014E: +MYR79.9b). Click here for full report » Technicals Still unstable just above the 1,700 mark The FBMKLCI declined 7.40 points to 1,709.18 yesterday, while the FBMEMAS and FBM100 also closed lower by 38.38 points and 45.68 points, respectively. We recommend a �Take Profit� stance for the index. The KLCI Jan Futures moved into a minor 3.32-point premium against the FBMKLCI. Trading idea is a Take profit call on CIMB with downside target areas at MYR4.99 & MYR4.20. Click here for full report » Other Local News Mah Sing: Shareholders give nod to rights, bonus issues. Shareholders have approved the renounceable rights issue with free warrants and 1-for-4 bonus issue at the company�s extraordinary general meeting. The issuance was expected to raise up to MYR630m for future expansion of the company. The group expects the trading liquidity and marketability of its shares to improve further given the larger share base. Mah Sing also expect better 2015 sales, driven by launches worth of MYR5.96b in GDV. It targets a minimum of MYR3.43b sales in 2015. (Source: Business Times, The Edge Financial Daily) Scomi Energy Services: Bags MYR175m contract from TNB unit. The contract, affreightment for carrying bulk coal. It is for a period of two years commencing May 1 this year, with an option for TNB Fuel Services Sdn Bhd (TNBF) to extend it for another year. Under the contract, it is expected to transport about 1.2m tonnes of coal per year. (Source: The Egde Financial Daily) Puncak Niaga: To go into agriculture, construction. It is looking at diversifying its business into agriculture and construction sectors following the disposal of its water assets to Kumpulan Darul Ehsan Bhd (KDEB). Besides that, it is also eyeing Asean countries for core water business. Oil and gas business currently contributes about 30-40% to Puncak Niaga�s (PNHB) revenue. Going forward, the company expects to see a 5-10% growth its oil and gas revenue. PNHB also said that it was not directly affected by the current slump in oil prices, as it was not involved in the exploration segment but in the maintenance and servicing segment. (Source: Business Times, The Edge Financial Daily) Outside Malaysia U.S: Fed officials saw rate rise unlikely before April meeting. Most members of the Federal Open Market Committee thought a patient stance "indicated that the committee was unlikely to begin the normalization process for at least the next couple of meetings," according to minutes of the Dec. 16-17 gathering released in Washington. (Source: Bloomberg) Canada: Crude oil export plunge widens November trade deficit. Shipments of crude oil and bitumen dropped 9.9% YoY to CAD 6.9b in November, the biggest decline since February 2011, Statistics Canada said from Ottawa. Prices fell 6.7% YoY and volumes by 3.4% YoY. It was the sixth straight monthly decline in energy shipments. (Source: Bloomberg) E.U: Euro-Area deflation risks mount as consumer prices fall. Deflation is stalking the euro area as European Central Bank policy makers gather for their first meeting of 2015. The backdrop is a 0.2% annual drop in consumer prices, the first in more than five years. For President Mario Draghi, who wants to open the money tap, the data may push the central bank closer to the unprecedented step of buying government bonds to revive growth and inflation. (Source: Bloomberg) Germany: Unemployment fell for a third month in December to a record low, signaling that growth in Europe's largest economy will accelerate in 2015. The number of people out of work fell a seasonally adjusted 27,000 to 2.841 million in December, the Federal Labor Agency in Nuremberg said. The adjusted jobless rate dropped to 6.5%, the lowest level in records going back more than two decades. (Source: Bloomberg) Italy: Unemployment rises to new high, showing Europe divergence. Italian unemployment unexpectedly rose to a record high that's more than double the German rate, keeping alive concerns about the diverging growth outlook in the euro area. The jobless rate increased to 13.4% from a revised 13.3% in October, while separate data showed the euro- region rate at 11.5%. (Source: Bloomberg) Thailand: December consumer confidence and economic sentiment rebounds on oil prices. Consumer confidence index rose to 81.1 from 79.4 in Nov 2014, University of the Thai Chamber of Commerce said. Index of economic sentiment rose to 70.5 from 68.8 in Nov. (Source: Bloomberg) Vietnam: Central bank devalues Dong to buttress exports. The State Bank of Vietnam devalued the dong for the second time in seven months as regional currencies declined, seeking to support exports that have sustained the country�s economic growth. The central bank weakened its reference rate 1% to 21,458 dong to a dollar it said on its website late. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,709.2 (8.5) (0.4) JCI 5,207.1 21.8 0.7 STI 3,298.4 4.1 0.5 SET 1,500.8 15.6 1.6 HSI 23,681.3 1.6 0.8 KOSPI 1,883.8 (6.3) 0.1 TWSE 9,080.1 5.4 0.4 DJIA 17,584.5 6.1 1.2 S&P 2,025.9 9.6 1.2 FTSE 6,419.8 (4.9) 0.8 MYR/USD 3.582 9.3 0.7 CPO (1mth) 2,349.0 (10.6) 1.7 Crude Oil (1mth) 48.7 (50.6) 1.5 Gold 1,211.4 0.8 (0.6) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.96 16.00 Axiata 7.07 7.60 Sime Darby 9.40 10.20 Genting Malaysia 4.02 4.60 Gamuda 5.02 6.00 Westport 3.32 3.60 SP Setia 3.35 3.98 AFG 4.80 5.50 Hartalega 7.01 8.50